Nikkei 225 Declines on U.S. Jobs, Japan Machinery Orders

By Norie Kuboyama -
Jul 9, 2012

Japanese stocks fell, with the Nikkei
225 Stock Average declining the most in a month, after machinery
orders plunged the most in a decade and a U.S. employment report
missed estimates. Volume was the lowest since January.

The Nikkei 225 fell 1.4 percent to 8,896.88 at the 3 p.m.
close in Tokyo, its biggest decline since June 8. The broader
Topix Index lost 1 percent to 763.93, with almost two shares
falling for each that rose. The number of Topix companies’
shares traded was the lowest since January 5, according to data
compiled by Bloomberg.

The nation’s machinery orders, an indicator of capital
spending, fell 14.8 percent in May from the previous month, the
Cabinet Office said. That was the biggest decline since 2001,
according to data compiled by Bloomberg. Economists had been
expecting a 2.6 percent decline. The nation’s current-account
surplus was the smallest in May since at least 1996.

Topix Valuations

The Topix (MXAP) has fallen 12 percent from its peak on March 27
as growth in the U.S. and China slows amid concern Europe’s debt
crisis is spreading. The decline has cut the price of shares on
the gauge to 1.1 times book value, compared with 2.1 times for
the Standard & Poor’s 500 Index and 1.4 times for the Europe
Stoxx 600 Index. A number less than one means that companies can
be bought for less than value of their assets.

Futures on the S&P 500 fell 0.4 percent today. The gauge
slid 0.9 percent on July 6 as U.S. companies hired fewer workers
than forecast in June, with the unemployment rate holding at 8.2
percent.

Nissan lost 2.4 percent to 728 yen. Fuji Heavy Industries
Ltd., which makes Subaru cars and gets more than 45 percent of
its revenue from North America, slid 2.7 percent to 639 yen.

“There’s disappointment about the jobs data,” said
Toshiyuki Kanayama, a market analyst at Tokyo-based Monex Inc.
“Many investors had expected the job number would beat market
estimates.”

Crude Drops

Energy-related companies declined after crude oil for
August delivery fell 3.2 percent to settle at $84.45 a barrel in
New York on July 6. Inpex fell 2.1 percent to 443,500 yen Japan
Drilling Co., an offshore drilling contractor, slipped 1.9
percent to 2,406 yen.

The London Metal Exchange Index of prices for six
industrial commodities including copper and aluminum slipped 2.2
percent, falling for a third day. Sumitomo Metal Mining Co. fell
1.9 percent to 887 yen.

Tokyo Electron tumbled 6.1 percent to 3,460 yen after
saying April-June orders fell 28 percent from the preceding
quarter to 79 billion yen ($993 million). The investment rating
on the stock was trimmed to neutral from overweight by JPMorgan,
which said it may take time for earnings to recover due to the
slump in orders.

China Inflation

Shares earlier pared losses on improved prospects for
easing after China’s consumer price index rose 2.2 percent from
a year earlier, the National Bureau of Statistics said today in
Beijing. That compares with the 2.3 percent median estimate in a
Bloomberg News survey of 32 analysts. Producer prices dropped
2.1 percent, versus the median forecast for a 2 percent fall.